The agency has cut the outlook based on the country's troubled housing market, where prices are falling fast, the level of public debt, and weaknesses in the country's banking sector that was highlighted by last week's nationalization of SNS Bank.

Fitch said Tuesday the nationalization was not enough to merit downgrading the country's long-held AAA sovereign rating.

The agency says the "housing market correction" is worse than it had previously expected and will continue to weigh on consumer spending.